In the past, healthcare plans placed few restrictions on their subscribers' health care choices, such as selecting physicians and pharmacies. Health care was generally provided by individual physicians acting independently. Likewise, patients receiving prescriptions from their physicians typically had them filled at an independently operated pharmacy. The health care system has undergone radical change in recent years as a result of pressures to contain costs and increase profitability. Most health care plans are now administered by managed care organizations (“MCOs”). Under the MCO system much of the decision-making power is shifted from the healthcare provider to an administrative function within the managed care organization. MCOs establish standards of care, standardize methods of delivering care, and evaluate the care given.
Similarly, many pharmacies have migrated from independent operations to regional and national networks of Publicly-held Corporate Pharmacies (“PCPs”). This paradigm shift is due to a desire by the industry to minimize the cost of drug therapy and to maintain profitability. The MCOs have driven much of this trend by entering into agreements with pharmacy networks to obtain advantages such as volume discounts, then providing economic incentives such as reduced co-payment requirements for plan subscribers who purchase their prescriptions at the preferred pharmacies. Thus, joining a pharmacy network has become an economic necessity for the economic survival of numerous independent pharmacies, many of whom have seen their market share erode as a result of the MCOs' influence on the purchasing habits of their health plan subscribers.
MCOs often delegate the administration of the prescription benefits portion of their healthcare plan to a Prescription Benefits Manager (“PBM”) in order to reduce administrative expenses. PBMs are private companies that contract with health plans or plan sponsors and specialize in claims processing and administrative functions involved with operating a prescription drug program. PBMs work to minimize costs and maintain profits through a variety of means, including volume purchases, quality control, formularies, movement of market share, and negotiated fees.
An MCO having charge of a number of healthcare facilities, such as nursing homes, will frequently negotiate a “national agreement” with a network of publicly held corporate pharmacies whereby all of the pharmacies within the PCP network agree to provide products and services to all of the healthcare facilities (“HCFs”) owned by the MCO. The facilities may then purchase prescriptions from any of the PCP network pharmacies under the terms of the national agreement, often called a “plan.” The MCO then outsources the administration of the plan to a PBM, which receives claims from PCP network pharmacies for each prescription filled for the MCO's healthcare facilities. The claims are reviewed by the PBM for compliance with the plan's terms.
The PBM may also perform ancillary services, such as ensuring compliance with a “formulary” system. A formulary is a list of drugs and treatment regimens deemed by a panel of healthcare professionals to be appropriate for treatment of various patient ailments. Formulary system management is the application of quantitative techniques to ensure high-quality, yet cost effective therapy. For example, a PBM may suggest an alternate drug regimen listed in the formulary having an equivalent efficacy as the originally prescribed drug but at a lower cost. Other services may include a Drug Utilization Review (“DUR”) to ensure that patients are receiving appropriate, medically necessary, prescription drug therapy. Similarly, a Drug Regimen Review (“DRR”) is a frequent evaluation of the medications being taken by a patient in intermediate- or long-term care facilities. Typically performed by a consulting or clinical pharmacist, DRR is especially useful in avoiding adverse drug reactions and drug interactions in patients taking multiple medications.
Problems can arise, however, when multiple facilities within a healthcare organization purchase prescriptions from multiple pharmacies within the PCP network. A frequent problem is non-uniform pricing of the same prescription by different pharmacies. Non-uniform pricing can occur for a number of reasons, such as misinterpretation of plan requirements and clerical errors. Another problem is inconsistent review of prescriptions for compliance to the plan formulary, which can easily result in a higher-cost therapy being dispensed. This causes the PBM to incur higher operating costs with little or no corresponding additional benefit to the patient. Still another problem is related to the pharmacies' DUR and DRR review of prescriptions. Inherent variations in operating practices for individual pharmacies in the network can lead to inconsistent review of prescriptions. These problems are exacerbated by the frequent geographic separation between the healthcare facilities, the pharmacies, and the PBM.
There is a need for a method to ensure that all prescriptions filled under a national contract are priced in accordance with the agreement. There is a further need to provide consistent formulary compliance under a national contract and to provide consistent review of prescriptions for adverse drug reactions.